Despite backlash, loot boxes could be essential to gaming’s future

Analysis sees loot box spending ballooning 62 percent, to $47 billion, by 2022.
With all the controversy, scrutiny, and international regulation
randomized video game loot boxes are facing these days, you might think
the practice of charging players for a chance at unknown in-game items
might be set for a precipitous decline. On the contrary, though, one
analyst sees spending on loot boxes increasing by over 62 percent in the
next four years to become a $47 billion piece of the industry. By then,
loot boxes will represent over 29 percent of all spending on digital
games, the analyst said, up from just under 25 percent currently.

In a newly published forecast of the global game market, Juniper
Research concedes that developers are "effectively encouraging a form of
in-game gambling" with loot boxes and using that addictive potential to
"extend both the lifecycle and engagement of games titles to their
audience." These kinds of non-traditional money-making techniques are a
practical necessity for developers squeezed by increasing costs and
stagnant or declining up-front game prices, Juniper says.

"As new technologies and standards come into play, costs are
ever-growing, yet game prices, in the console industry particularly, are
relatively flat, leading to developers seeking new means to monetize
their products," Juniper analyst Lauren Foye told Ars. "Thus it is
logical that loot box mechanics, which have proven so successful for
titles such as CS:GO and PUBG, would see integration onto new, upcoming
titles."
Mobile games will drive much of the increase in loot box earnings, Foye
tells Ars, with 130 million unique mobile players buying loot boxes by
2022. But Foye also sees console games as "the next to see significant
disruption from loot boxes" in the coming years, with an increase in
free-to-play games ironically increasing the spending per player on
consoles.

While Juniper acknowledges the pushback against loot boxes among
players, governments, and pockets of the industry, none of that should
stop their continued roll out "across the board," Foye says. "Even with
recent furore around Battlefront II and Shadow of War, we believe that
developers will simply tweak pricing and relative odds for loot, to
quell backlash."
"Whilst some restrictions may be put in place by government and
regulatory bodies, the practice is unlikely to be banned outright simply
due to the effect it would have on the games industry as a whole,"
Juniper writes in a recent white paper on the subject. And while
platforms like Steam have recently cracked down on third-party "skin
gambling" sites, Juniper argues they've resisted calls to ban skin
trading altogether for the simple reason that they make too much money
from their five-percent transaction fee.

Juniper's research is backed up by a Game Developers Conference attendee
survey from earlier this year, which found one in 10 developers were
working on a game that used loot boxes in some way.
Kyle Orland